Crisis-hit Sri Lanka will seek a downgrade of its credit status to try to access concessionary loans usually available only for the world’s poorest nations, the government said Tuesday.
With GDP per capita of $3,814 last year, Sri Lanka was considered a relatively prosperous nation of 22 million people until the government ran out of foreign exchange.
Despite suffering its worst-ever financial crisis, it is still considered a “lower middle income country”.
That makes it ineligible for concessionary loans from the World Bank’s International Development Association (IDA), which helps countries classed as “low income” — a status Sri Lanka moved up from in 1997.
Government spokesman Bandula Gunawardena said the cabinet had approved seeking a “credit status downgrade” to a “gap” country to make it eligible for IDA assistance.
A top official at President Ranil Wickremesinghe’s office, Dinouk Colombage, described the move as a “reverse graduation” for a limited period.
The South Asian nation defaulted on its $51 billion external debt for the first time in April after suffering an unprecedented shortage of foreign exchange to pay for even the most essential imports.
( curtesy barrons.com)
